Our DailyMarket Reports

Morning Gold & Silver Market Report – 10/14/2011

10/14/2011 8:01:52 AM By: Ryan Schwimmer

FEARS RETURN TO CONTAGION IN EUROPE; INVESTORS “MORE BULLISH THAN EVER” ON GOLD

In overnight trading, precious metals spent time making up for the moderate losses experienced yesterday. U.S. stock futures are pointing towards a high open today, and were pushed higher by the release of retail sales data that blew past expectations. Particularly strong were the numbers for the auto industry, which typically holds a positive correlation to platinum and palladium. The industrial precious metals both added to gains after the release.

Members of the Group of 20 are meeting today to discuss the European debt crisis. The fears in Europe have returned to contagion, as Spain’s credit rating downgrade has officials worried that a much larger economy than Greece could be in serious trouble. Pravin Gordham, South Africa’s Finance Minister, said, “The resources available in the [European Financial Stability Facility (EFSF)] and [International Monetary Fund (IMF)] are not adequate if the contagion is going to spread any further.” Regarding the EFSF, Wilbur Ross, chairman and CEO of WL Ross, said that European leaders “are always a couple of pages behind.” He continued, “I don’t think that the 440 billion euros by itself is nearly enough. I think you need a trillion or a trillion and a half firewall in order to be convincing to the markets that this thing can be played out without disasters to the markets.”

Bloomberg reports that the late-September decline in gold prices have investors “more bullish than ever.” Central banks are continuing their recent trend and buying more gold. Thailand, Bolivia, and Tajikistan combined for 18.2 tons purchased in August, according to the IMF. One analyst explained, “There’s … risk in the world and there’s no sign of that going away any time soon. All the factors that drove gold to a record are still there … There’s strong physical demand globally.”

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